EU targets Chinese electric cars with hefty tariffs up to 36.3%

The European Commission presented a proposal on Tuesday to impose permanent tariffs on electric cars imported from China to the EU. If member states do not oppose the proposal, it will come into effect by October 30 at 5:00 AM EDT and the tariffs will remain in place for five years.

The tariffs, described as compensatory, will apply to all electric vehicles manufactured in China, including those produced there by European companies. The rates will be high, reaching up to 36.3 percent. The reason is the subsidization of electric vehicle production by the Chinese authorities, which makes them significantly cheaper than those produced in the EU. European manufacturers cannot cope with this unfair competition.

An EU official told journalists in Brussels on Tuesday that negotiations with Beijing to resolve the matter amicably have not yet resulted in an agreement, but they are ongoing. The ball is in China's court, he emphasized.

The European Commission does not intend to wait long. If Beijing does not propose a solution to the problem, the tariffs will come into effect by October 30 at 5:00 AM EDT and will remain in place for five years.

The European Commission has made some adjustments to the tariff rates due to calculation errors compared to the previous proposal, which suggested temporary tariffs. Currently, BYD vehicles will be subject to a 17-percent tariff, Geely to 19.3 percent, and SAIC to 36.3 percent. Companies cooperating with EU officials in the investigation will face a 21.3 percent rate, while those that did not cooperate will face the highest rate of 36.3 percent.

The European Commission also decided not to retroactively apply compensatory tariffs. The original decision on temporary rates required the creation of bank guarantees for this purpose, but the commission ultimately withdrew from this. It stated that "the legal requirements for retroactive tariff collection were not met."

Once the proposal is published, electric vehicle manufacturers will have 10 days to submit their comments. The European Commission will analyze them, and member states will present their opinions. If there are no objections, the final decision will be published in the Official Journal of the European Union and will come into effect.

EC President Ursula von der Leyen announced the investigation into China's subsidization of electric car production on September 13, 2023, during her State of the European Union address at the European Parliament.

This decision was based on growing concerns about the rapid increase in China's exports of cheap electric vehicles to the EU.

China is the largest producer of electric vehicles in the world. In 2023, the Middle Kingdom's global export of these cars increased by 70 percent, reaching a value of $34.1 billion. The European Union is China's largest recipient of electric vehicles, accounting for nearly 40 percent of Chinese exports.

In 2023, EU countries purchased 3.5 billion euros worth of Chinese cars, almost 40 percent more than the previous year. This raised concerns in Brussels and some EU capitals, as the prices of Chinese electric cars are typically 20 percent lower than those of EU-produced models.